Klarna Stock Plunges 19.41% as Q3 Losses Credit Provisions Drive Record Low

The share price dropped to a record low on Nov. 21, with an intraday decline of 8.31% so far this month.

Klarna’s recent performance has been shaped by a $14 million adjusted operating loss in Q3 2023, driven by a doubling of credit loss provisions linked to its expanding longer-term financing products. While these offerings—such as installment plans for large purchases—generate higher transaction margins, IFRS 9 accounting rules require upfront provisioning for potential losses, creating near-term profit pressures. The stock’s three-day decline of 19.41% reflects investor skepticism over credit risk in its U.S. and European operations, despite declining realized losses since January 2023.

Strategic moves into neobanking, including the Klarna Card, have added 4 million customers but come with trade-offs. A $6.5 billion loan sale to Elliott Investment Management in Q3 highlighted the need to manage riskier assets, while high provisioning costs for new products have raised scalability concerns. Broader market jitters about credit-driven growth models and macroeconomic headwinds—including interest rate uncertainty and consumer debt risks—have further weighed on sentiment. Analysts remain split, with some emphasizing Klarna’s long-term disruptive potential but others cautioning that profitability timelines remain unproven.